Citigroup considering onshore cash equities business in China

Above, reflections are seen on the glass facade of a Citibank branch in Beijing, China. (Reuters)
Updated 06 October 2017
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Citigroup considering onshore cash equities business in China

HONG KONG: Citigroup is considering setting up an onshore cash equities business in China and expanding research coverage of Chinese stocks, to boost its share of the business in Asia, said the head of its regional equities unit.
The US-headquartered bank is also looking to add at least 10 people to the unit, including bankers and technology staff, mainly at its Hong Kong and Singapore hubs, Richard Heyes told Reuters.
Citi’s sharpened focus on its Asia equities business, which includes stock trading and research, is part of its global effort to bolster trading technology, hire senior bankers and boost financing to hedge funds.
“It’s an interesting opportunity, one we are looking very closely at,” Heyes said, referring to setting up an onshore cash equities business in China, which he said was in its early stages. He declined to give details.
“At the moment we don’t feel we have a competitive disadvantage doing it from Hong Kong in the way the majority of people do. But over time, do I think we should strongly think about on-ground presence? Yes.”
Analysts said China-listed shares’ inclusion in the US index publisher MSCI’s emerging-markets benchmark this year, a milestone for global investing, would lead to a jump in demand for brokerage and research services.
That came on top of the introduction of programs allowing two-way trading between stock markets in Hong Kong and Shanghai and Shenzhen, as part of Beijing’s efforts to open up capital markets.
China’s brokerage revenue pool touched $41 billion in 2015, showed a report last year by Quinlan & Associates.
Assuming institutional broking revenue is 10 to 15 percent of the total, a 1 percent market share would bring $40 million to $60 million in annual revenue to an equities house in the world’s second-largest economy, the consultancy said.
To tap into an expected demand surge, Citi, which provides research on 175 China-listed firms, plans to increase coverage to 200 by year-end and 250 in the longer term, Heyes said.
“We have seen very clearly, as one of the biggest players in (the Hong Kong stock) connect, a very significant ramp up in the opening of accounts. It’s very clear that many people are getting prepared for future activity in the China market.”
Citi is also looking to bolster financing support for hedge funds, to help win more trading business and boost its Asia equities market share.
“We have had very meaningful success with some very important, large global hedge funds in the US We are now expecting or have commitments from many of them to on-board us in Asia either by end of this year or early next year.”


Egypt stock market plunges as retail investors take flight

Updated 19 September 2018
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Egypt stock market plunges as retail investors take flight

  • Biggest index drop in Egypt since mid-2016
  • Saudi Arabia outperforms in Gulf

LONDON: Egyptian stocks tumbled to their lowest level this year on Wednesday as retail investors took flight.
A sharp rise in Suez Canal revenues, a major foreign exchange earner for the country, was not enough to quell investors concerns about the strength of the currency.
The main Egyptian stock index lost 3.8 percent which some fund managers blamed on generally negative sentiment toward emerging markets worldwide as well as more local speculation about possible currency devaluation.
“Our channel checks suggest the sell-off in the Egyptian market is local retail and institutions driven, on currency fears and speculation over a further round of devaluation,” said Vrajesh Bhandari, portfolio manager at Al Mal in Dubai, Reuters reported.
“Selling is further intensified as margin calls are triggered and technical support levels break down. The country canceled three consecutive Treasury auctions, citing investors’ unrealistic yield demands.”
Egypt’s Suez Canal revenues rose to $502.2 million in August up 6.7 percent from a year earlier according to official data released on Wednesday.
Elsewhere regional stock markets closed mostly lower with the exceptions of Abu Dhabi which edged 0.2 percent higher and Saudi Arabia, the best regional performer, which rose by 1.1 percent.
Saudi stocks are benefiting from the strong oil price which eased slightly yesterday but still hovered just under $79.
OPEC and some other oil producers including Russia will meet in Algeria on Sept. 23 to discuss how to allocate supply increases within their quota framework to offset the loss of oil exports from Iran following the introduction of sanctions by the US.
Those measures will come into force on Nov. 4 and data suggests that buyers are already retreating from Iranian crude purchases.
A key question for the oil price as well as regional stock markets in the weeks ahead will be the extent to which other Gulf oil exporters can compenaste for the loss of Iranian supplies by pumping more.